Target’s ‘Unique’ Plan to Raise Prices?

By Quentin Fottrell

Reuters

Target’s plan to stock more “unique” items that can’t be found elsewhere could have a not-so-special impact on consumers, say analysts: higher prices.

The Minneapolis-based store says the move is aimed at preventing customers from “showrooming,” according to a recent letter sent to stores from the retailer’s headquarters. This practice involves consumers checking the price of goods, seeing what they look and feel like up-close, and then buying them elsewhere – often at a cheaper price from online retailers like Amazon.com. As part of the new initiative, Target will also test Apple displays in 25 of its stores that will have an assortment of products that can only be bought at Target. Molly Snyder, a spokeswoman for Target, says the company wants to provide a “superior guest experience” and says it strives to maintain competitive prices. She declined to comment on the specifics of the new product lines.

Experts say the extra time, money and resources spent developing exclusive product lines with partners typically means a bigger price tag for shoppers. That, combined with the inability to comparison shop, leaves consumers with less information to push for lower prices, says Yung D. Trang, president of TechBargains.com, a technology deals website. Dan de Grandpre, CEO and editor-in-chief of dealnews.com, says the extra manpower needed to roll out these exclusive lines will force Target to either hike prices or reduce profit margins. “The cost will likely be passed on to consumers,” he says.

Those higher prices may even spread to non-exclusive items, analysts say. Bringing Apple in-house does more than give consumers another place to buy their iPhones or iPads – it also helps Target add more luster to its cavernous, big-box store image, differentiate it from competitors like Costco and gives it more leeway to charge more, says Robert Passikoff, founder and present of marketing consultancy Brand Keys. He calls it: “The Apple-to-Target Halo Effect.”

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Pay Dirt examines the millions of consumer decisions Americans make every day: What to buy, how much to pay, whether to rave or complain. Lead written by Quentin Fottrell, the blog examines these interactions, providing readers with news, insight and tips on shopping, spending, customer service, and companies that do right – and wrong – by their customers.